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National Accounts in the Calculation of PPPs

National Accounts in the Calculation of PPPs ADB Manila, May 2006 Role of national accounts experts ICP 2005 is a joint project involving both price statisticians and national accountants. National accounts: Provide the expenditure weights

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National Accounts in the Calculation of PPPs

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  1. National Accounts in the Calculation of PPPs ADB Manila, May 2006

  2. Role of national accounts experts • ICP 2005 is a joint project involving both price statisticians and national accountants. • National accounts: • Provide the expenditure weights • Total and per capita expenditure aggregates converted using PPPs are the most important output of the programme

  3. 1993 System of National Accounts • ICP 2005 will be based on the 1993 SNA, but some approximations are inevitable. For example: • Non-profit institutions not distinguished • No estimates for valuables, patented entities... • No work in progress for agriculture • FISIM not allocated to users • No estimates for illegal activities

  4. Key requirements (1) • GDP must cover: • crops and livestock for own consumption • informal / underground activities: • open markets and street traders; • food and drinks sold by itinerant vendors; • plumbers, builders, electricians; • taxis, vehicle repairs; • health and personal services…

  5. Key requirements (2) • All government expenditure: • defence, townships, heads of state... • Software and mineral exploration (as capital formation) if significant • Significant NPISHs • religious, international • Imputed rents of owner-occupiers • modern and traditional

  6. Measuring imputed rents • Use rents actually paid for similar kinds of dwellings, in similar locations and with similar facilities • User cost method, rents are valued at cost - consumption of fixed capital, return on capital, regular maintenance, and insurance • Owners estimate of rental values

  7. The Expenditure Classification • The Expenditure Classification for the ICP 2004 is based on four international classifications: • COICOP for household expenditure • COPNI for NPISH • COFOG for government • CPA/CPC for gross fixed capital formation

  8. Structure of the Classification

  9. Examples of basic headings:Food

  10. Why do we need 155 Basic Headings? • Basic headings must cover a similar group of products • The price relatives between countries (price in one country divided by the price in another country) must be similar • Compromise between theory and practice

  11. Role of Basic Headings • Most detailed level for which weights are available • They are the starting point for participating countries to draw up regional lists of the specific goods and services for which they agree to collect prices. • The Basic Headings will be used as the framework for editing the reported prices • PPPs are calculated for the Basic Headings before aggregating them to higher levels for publication

  12. Data sources for household expenditures • Household budget/expenditure surveys • Retail trade statistics • Production statistics - agriculture and industry • Import and export statistics • VAT or sales tax statistics • Information on sales of tobacco and alcohol • Motor vehicle registrations • Sales by utility companies and state monopolies • FAO data base on food balances • Nutrition surveys • Supply and use tables

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